Business owners who want to strengthen their company can use marketing strategies to alter their position in the overall market. For example, market development strategies help a company increase its customer base, while market penetration strategies help increase sales to existing customers.

Market Development

Market development involves branching out in some way to increase customers by improving access to a current product. In other words, a company is focusing on developing a bigger market for its existing product, as opposed to, say, developing a better product to attract new customers or trying to get existing customers to buy more of its products.

Implementing a Marketing Development Strategy

Suppose a tax-preparation company chooses market development as its marketing strategy. It could open new branches in other regions to increase its number of customers. Or it could implement a web-based service to allow distant potential customers to access its services remotely. Note that this second option mixes distinct strategies: the company engages in market development by increasing the scope of its services, or engaging in product development. Companies sometimes can mix marketing strategies in this way to broaden their potential customer base while also improving their product for existing customers.

Market Penetration

The goal of marketing penetration is to strengthen a company’s position within an existing market. In other words, market penetration focuses on increasing the involvement of its current customers rather than chasing new customers. Strengthening a company’s position within its existing market can have various beneficial side effects. For instance, revenues might increase, customer satisfaction might improve or competitors might lose market share.

Implementing a Market Penetration Strategy

Suppose a grocery chain decides to implement a market penetration strategy. The company might run a promotion that offers discounts to repeat customers. The goal would be to encourage existing customers to make all their purchases at the particular grocery store. Without the attraction of the discount, existing customers might instead visit competitors out of convenience or to obtain better prices. So this single market penetration strategy potentially can increase sales, improve customer satisfaction and retention, and keep customers away from competitors.

Considerations

Small businesses should choose the most cost-effective marketing strategy. For example, a bakery owner might not have the financial resources to open a new physical location in a distant market. She probably should focus instead on increasing sales to her existing customer base. A window-cleaning company, on the other hand, is mobile, so its owner probably would find it most cost-effective to market his services in new regions.

References

About the Author

Stan Mack is a business writer specializing in finance, business ethics and human resources. His work has appeared in the online editions of the "Houston Chronicle" and "USA Today," among other outlets. Mack studied philosophy and economics at the University of Memphis.